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April 17, 2020 | Shilling: Global Recession will Last into 2021, Stocks Headed Lower

Economist A. Gary Shilling says the recession of 2020 is likely to last into 2021 and drive lasting behavioral changes globally. Here is a direct video link.

April 16, 2020 | Overdue Train Wreck Unfolding in Canada’s Highly-Levered Realty Markets

As Canada’s manufacturing and oil sector shrunk over the last decade, real estate and residential construction became the economy’s largest sector accounting for 15% of GDP in 2019.  Low rates, lax lending and debt-enabling government policies helped Canadians to go on a self-destructive spending spree levering up property gains to extract more consumption and speculation […]

April 15, 2020 | The Long Road To Recovery, Especially for Canada

Forced deleveraging and the oil crash are compounding the COVID-19 costs and hangover for Canada.  Manulife chief economist Frances Donald explains it well in this clip. Canada’s economy is far more vulnerable to COVID-19 shock than the U.S.: Manulife’s Donald.  Here is a direct video link.

April 14, 2020 | IMF Sees Worst Year Since the Great Depression

The IMF has declared the recession of 2020 the worst since the Great Depression, assuming that the virus goes away in the second half and the economy gets back to growth. This chart shows the IMF’s projections for the G7 economies in this best-case scenario.In the more likely scenario that the virus abates over the next […]

April 13, 2020 | Debt Free in 30: Stress in Canada’s Mortgage Market

All types of debt have exploded in recent years due to indiscriminate lending and appetite for excessive borrowing which enabled an epic wave of real estate speculation and household spending.  This was always doomed to end in a firestorm of defaults and contracting credit. COVID-19 has presented an overdue spark. How has COVID-19, job loss, […]

April 8, 2020 | Big Picture Perspective on Bear Markets with Recessions

As shown below, the 23% rebound in equity prices since March 23 has returned the S&P 500 to a short-list of the least attractive valuations in history at 19x forward earnings estimates, and equal to the market top on February 19.  Canadian equity valuations have followed along for the ride.  In short, from present levels, […]

April 7, 2020 | Make North America Great Again: Invest in Workforce and Innovation

From 2009 to 2019, S&P 500 companies alone poured $5.29 trillion into share buyback programs (data from S&P)–more than double the $2.59 trillion from the 10 years prior. Dividend payments to shareholders saw a similar increase, nearly doubling to $3.53 trillion from $1.89 trillion. As charted below, this has made corporations the only net buyers […]

April 6, 2020 | Bear Market Bounce (aka short-covering and sucker’s rally)

A lot of shorts getting covered today across most risk assets and yields and this has driven yet another dramatic rebound day. These are expected given the rapid price declines between Feb 19 and March 23. On March 31st, my partner Cory Venable highlighted 2625 to 2725 as a rebound test for the S&P 500 […]

April 3, 2020 | The Next Global Debt Crisis Isn’t Coming–It Has Arrived

A good little primer on global debt waves in this segment.  Every debt is counted as an asset on the balance sheet of lenders and investors, and these have been levered as collateral underlying trillions in other spending, loans and asset purchases of all kinds over the last decade.  As defaults spread and asset prices […]

April 2, 2020 | REIT Liquidity Crunch in Motion

Yield-seeking buyers indiscriminately ballooned the price of real-estate-for-let and real estate investment trusts (REITs) in recent years. The real estate deals were highly levered to start with and then REIT holders borrowed against their shares to spend and buy even more.  A lot of private equity, pensions and family offices heavily bet in this space.  […]

April 1, 2020 | Understanding the Third Cyclical Bear Since 2000

A new report from economists at ING (which you can download here) looks at which economies are being hit hardest by the coronavirus supply chain shock and concludes Canada and Germany are the biggest losers: “Of the world’s 10 largest economies, Canada suffers most from the fallout of foreign supplies and Germany suffers most from weaker […]

March 31, 2020 | Good Outcome From Pandemic Shock: Buybacks have Slowed Dramatically

Corporations buying back their own shares was the largest source of equity demand manufactured in the 2009 to 2019 expansion cycle. Borrowing funds to do so was the go-to genius financial gimmick to boost prices and earnings per share. It is also one of the main reasons that publicly traded corporations are today at record […]

March 30, 2020 | 60 Minutes Australia: COVID-19 Whistleblowers Silenced by China

Travelling in Spain over Christmas, I came down with terrible flu: head and body aches, fever, violent dry cough, exhaustion. I was on the couch for a few days and coughing for a couple of weeks.  I did not pass it on to my family, amazingly, and I think this suggests it was not a […]

March 27, 2020 | Beware Bullish Bounce Back Enthusiasts

Today as the Bank of Canada follows other G7 nations in slashing its policy rate to the .25% low of the 2008 financial crisis, it also expanded its bond-buying programs to include the recently frozen commercial paper market.  Borrowing costs for corporations at record indebtedness have spiked just as revenues are vaporizing–this is not a […]

March 26, 2020 | Proactively Manage Your Finances: Do it for You!

Our neighbour is a plastic surgeon with a busy cosmetic practice; his licence plate reads “DOIT4U’. It’s become something of a punchline at our house when commissioning our kids, home from school for the summer, to help with jobs around the house. ‘Do it for you,’ we joke. In reality, of course, there is a legit […]

March 25, 2020 | Fiscal Hopium Rally Brings Another Opportunity to Reduce Risk

Global risk markets have experienced the steppest 30 percent decline in history over the last month.  We should expect to see some big reversal rallies punctuating the downtrend–even while the trend continues down. Today, as algos key on the promise of a big US federal aid package and a G7 pledge to do “whatever is […]

March 24, 2020 | The Health Toll of Reckless Financial Policies

A study published in the Journal of the American Medical Association in 2018 found that a sudden loss of wealth—negative wealth shock—can trigger health problems and reduce longevity. With limited years remaining to regain losses in older age, researchers noted that the health consequences of such shocks can be long-lasting.  The effect was most marked if […]

March 23, 2020 | Implications for Canadian real estate as layoffs surge

As I have noted many times, the seeds of financial crisis and panicked liquidation have been sown through the last decade of reckless lending, borrowing and price-indiscriminate asset-buying.  Highly indebted companies, households and speculators were already cash-strapped before the coronavirus shutdown. This clip from BC real estate analyst Steve Saretsky notes some key impacts moving […]

March 20, 2020 | Market Carnage: What May Come Next

Worthwhile discussion in this 1-hour clip from two other people who also do their daily measuring work, and so, also saw this bear market coming. Global markets are in an historic tailspin and it doesn’t look like it’s going to get better anytime soon. You don’t need us to tell you that. What you may […]

March 19, 2020 | Managing Risk Effectively is the Measure That Matters Most

Yesterday, we sent a note to our clients acknowledging the stress of our present times and wishing them good health. We also noted that their accounts with us have been rising in value throughout, and although not there yet, we are optimistic about the progress underway toward our price targets on corporate assets we’ve been […]

March 17, 2020 | Beware False Prophets Who Never See Bear Markets Coming

As risk-markets tank worldwide, the Canadian TSX has followed suit with a loss of 30% in less than a month and is already back fathoming the 12,400 level it first reached in December 2006–more than 13 years ago.  This is a good start. The TSX is now just 9% higher than where it topped in […]

March 16, 2020 | Cash Needed for Operating and Realty Buys Should be Nowhere Near Equity Markets

It is a classic financial error to put funds that are needed for operating expenses, or a capital purchase like real estate, or another asset, into publicly-traded financial products like equities, corporate debt (or funds and ETFs of them). Unfortunately, many people have been foolishly doing this in recent years, and now, as financial markets […]

March 13, 2020 | Friday the 13th: Another Opportunity to Review Risk Exposure

A big bounce this morning affords another opportunity to review capital risk for the masses who have come into this downcycle imprudently exposed, unprepared and illiquid. The damage of the past week has been dramatic and widespread and the knock-on effects are not yet fully evident for many funds, managers and traders.  Fallout is in […]

March 12, 2020 | Time for Sober Review and Wise Choices

As I have explained repeatedly, COVID-19 is a catalyst, not a cause, of the global financial panic now unfolding. This is no time for irrational responses, but neither is it a time to passively watch risk-exposed life savings plunge. It is never too late for sober review and wise choices. If you would like me […]

March 10, 2020 | Not a Time to Panic nor Freeze

As I explained in February, coronavirus is a catalyst not a cause of a much-deserved and synchronized repricing in global asset markets.  If you thought rising corporate security prices the past couple of years were justified, but that recent declines are ‘irrational’, you’ve missed the plot here.  If your financial adviser or manager is telling you this, […]

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